Reference no: EM13535175

Journal entries and trial balance

Utopia Realty acts as an agent in buying, selling, renting, and managing real estate. The unadjusted trial balance on October 31, 2012, is shown below.

	Utopia Realty
	Unadjusted Trial Balance
	31-Oct-12
		Debit	Credit
		Balances	Balances
11	Cash	13,150
12	Accounts Receivable	30,750
13	Prepaid Insurance	1,500
14	Office Supplies	900
16	Land	-
21	Accounts Payable	7,000
22	Unearned Rent		-
23	Notes Payable		-
31	Ian Rogstad, Capital		23,000
32	Ian Rogstad, Drawing	1,000
41	Fees Earned		120,000
51	Salary and Commission Expense	74,100
52	Rent Expense	15,000
53	Advertising Expense	8,900
54	Automobile Expense	2,750
59	Miscellaneous Expense	1,950
		150,000	150,000

The following business transactions were completed by Utopia Realty during November 2012:

Nov. 1. Paid rent on offi ce for month, $5,000.

2. Purchased offi ce supplies on account, $1,300.

5. Paid annual insurance premiums, $3,600.

10. Received cash from clients on account, $25,000.

15. Purchased land for a future building site for $90,000, paying $10,000 in cash and giving a note payable for the remainder.

17. Paid creditors on account, $4,500.

20. Returned a portion of the offi ce supplies purchased on November 2, receiving full credit for their cost, $200.

23. Paid advertising expense, $2,000.

Enter the following transactions on Page 19 of the two-column journal.

27. Discovered an error in computing a commission; received cash from the salesperson for the overpayment, $1,000.

28. Paid automobile expense (including rental charges for an automobile), $1,500.

29. Paid miscellaneous expenses, $450.

30. Recorded revenue earned and billed to clients during the month, $30,000.

30. Paid salaries and commissions for the month, $7,500.

30. Withdrew cash for personal use, $1,000.

30. Rented land purchased on November 15 to local merchants association for use as a parking lot in December and January, during a street rebuilding program; received advance payment of $3,000.

Instructions

1. Record the November 1, 2010, balance of each account in the appropriate balance column of a four-column account, write Balance in the item section, and place a check mark (v) in the Posting Reference column.

2. Journalize the transactions for November in a two-column journal beginning on Page 18. Journal entry explanations may be omitted.

3. Post to the ledger, extending the account balance to the appropriate balance column after each posting.

4. Prepare an unadjusted trial balance of the ledger as of November 30, 2012.

5. Assume that the November 30 transaction for salaries and commissions should have been $5,700. (a) Why did the unadjusted trial balance in (4) balance? (b) Journalize the correcting entry. (c) Is this error a transposition or slide?